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Blue Cross Payment Of $500 To Michigan Residents Proposed

Robin Erb, Detroit Free Press

By Robin Erb, Detroit Free Press

McClatchy-Tribune Information Services

Nov. 24--Concerned that a new nonprofit Blue Cross Blue Shield of Michigan might bleed dry its assets by sending them to for-profit subsidiaries, a state lawmaker is proposing it write a $500 check to each Michigan citizen before the insurer is allowed to transform its current business structure.

"I'm not sure if $500 is the right number, but I'm putting it forward," said state Rep. Tom McMillin, R-Rochester Hills.

For 30 years, the Blues in Michigan has been considered the insurer of last resort, a special status that exempts it from paying about $100 million in local and state taxes every year, but requires it to extend coverage to everybody, whatever their health status.

Additionally, the Blues' rate hikes are subject to oversight by the state's attorney general.

Under the plan put forth in September by Gov. Rick Snyder, the Blues would be turned into a nonprofit mutual insurer, be regulated like other insurers, and lose its tax-exempt status. Blue Cross officials have said the change is crucial with health care reform on the horizon.

As part of the deal -- general language already has been approved in the state Senate and is now being considered in a House committee -- the Blues would pay $1.5 billion over 18 years to a new Michigan Health and Wellness Foundation, which would promote health initiatives statewide.

Critics have argued that language in the bill to allow the Blues' conversion is too vague and falls short of assuring certain levels of payment each year.

The move also would deregulate the insurer, loosening protections against rate hikes, they said.

Andy Hetzel, spokesman for Blue Cross, reiterated Friday that the insurer is committed to its contributions to the Health and Wellness Foundation.

The final details of the business plan, including its annual payments to the health foundation, will be worked out with Snyder.